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Rite Aid Corporation Reports Fiscal 2024 First Quarter Results

  • Revenues of $5.7 Billion, Compared to Prior Year Revenues of $6.0 Billion
  • Retail Comparable Same Store Prescriptions Increased 4.7 Percent – Comparable Same Store Prescriptions, Excluding COVID Impact, Increased 7.4 Percent
  • Net Loss of $306.7 Million Compared to Prior Year Net Loss of $110.2 Million – Increase Largely Attributable to a Goodwill Impairment Charge at Elixir
  • Adjusted EBITDA of $91.7 Million, Compared to Prior Year Adjusted EBITDA of $100.1 Million
  • Updates Fiscal 2024 Outlook

Rite Aid Corporation (NYSE: RAD) today reported operating results for its first fiscal quarter ended June 3, 2023.

“Our first quarter results were driven by strong script growth, solid pharmacy margins and early progress with our turnaround program, which offset underperformance on front-end sales in the Retail Pharmacy Segment and a higher-than-expected medical loss ratio at Elixir Insurance,” said Elizabeth “Busy” Burr, interim chief executive officer. “To help mitigate this, we are making targeted reductions to SG&A and capital expenditures over the remainder of the year. Importantly, we made good progress on turnaround initiatives across key areas of the business, and we continue to believe we are on track to achieve Adjusted EBITDA growth in fiscal years 2025 and 2026.”

Consolidated First Quarter Summary

(dollars in thousands)

 

Thirteen Week Period Ended

     

Thirteen Week Period Ended

 

 

 

 

June 3, 2023

     

 

May 28, 2022

Revenues

 

 

 

 

$

5,653,162

     

$

6,014,583

Net loss

 

 

 

 

 

(306,718)

     

 

(110,191)

Adjusted EBITDA

 

 

 

 

 

91,715

     

 

100,130

For the first quarter, the Company reported a net loss of $306.7 million, or $5.56 loss per share, Adjusted net loss of $40.1 million, or $0.73 loss per share, and Adjusted EBITDA of $91.7 million, or 1.6 percent of revenues.

Revenues for the quarter were $5.65 billion compared to revenues of $6.01 billion in the prior year’s quarter, largely due to the reduction in the Company’s Prescription Drug Plan (PDP) membership and the loss of commercial clients at Elixir. The reduction in revenues for the first quarter was partially offset by an increase in Retail Pharmacy Segment revenues, driven by an increase in pharmacy sales.

First quarter net loss was $306.7 million, or $5.56 loss per share, compared to last year’s first quarter net loss of $110.2 million, or $2.03 loss per share. The increase in net loss is primarily due to a non-cash charge to write down Elixir goodwill, driven by performance in Elixir Insurance’s Individual Part D Plan and the Company’s decision to exit the Individual Part D market beginning in January 2024. Other factors contributing to the higher net loss were higher restructuring-related charges, a lower gain on sale of assets, higher interest expense and a decrease in Adjusted EBITDA. These were partially offset by decreased facility exit and impairment charges.

Retail Pharmacy Segment

(dollars in thousands)

Thirteen Week Period Ended

     

Thirteen Week Period Ended

 

 

 

 

June 3, 2023

     

 

May 28, 2022

Revenues

 

 

 

 

$

4,492,329

     

$

4,345,356

Adjusted EBITDA

 

 

 

 

 

70,049

     

 

73,682

Retail Pharmacy Segment revenues increased 3.4 percent over the prior year quarter driven by an increase in both acute and maintenance prescriptions, partially offset by a reduction in COVID vaccine and testing revenue as well as store closures. Same store sales for the first quarter increased 8.4 percent over the prior year period, consisting of a 13.3 percent increase in pharmacy sales, partially offset by a 4.4 percent decrease in front-end sales. Front-end same store sales, excluding cigarettes and tobacco products, decreased 3.8 percent. The number of prescriptions filled in same stores, adjusted to 30-day equivalents, increased 4.7 percent over the prior year period. Total same store prescriptions, excluding COVID immunizations and tests, increased 7.4 percent, with same store maintenance prescriptions increasing 7.6 percent and other same store acute prescriptions increasing 6.8 percent. Prescription sales accounted for 73.9 percent of total drugstore sales. Total store count at the end of the first quarter was 2,284.

Retail Pharmacy Segment Adjusted EBITDA was $70.0 million, or 1.6 percent of revenues, for the first quarter compared to last year’s first quarter Adjusted EBITDA of $73.7 million, or 1.7 percent of revenues. The decline in Adjusted EBITDA was due to a decrease in Adjusted EBITDA gross profit of $8.4 million, partially offset by decreased Adjusted EBITDA selling, general and administrative (SG&A) expenses of $4.8 million. Gross profit was negatively impacted by the decline in front-end sales, COVID vaccinations and testing and increased shrink expense, partially offset by an increase in prescriptions sold, better than expected recovery rates and the impact of generic drug settlements. SG&A expenses benefited from lower occupancy and other operating costs due to store closures and cost control initiatives.

Pharmacy Services Segment

(dollars in thousands)

Thirteen Week Period Ended

     

Thirteen Week Period Ended

 

 

 

 

June 3, 2023

     

 

May 28, 2022

Revenues

 

 

 

 

$

1,196,154

     

$

1,725,857

Adjusted EBITDA

 

 

 

 

 

21,666

     

 

26,448

Pharmacy Services Segment revenues were $1.2 billion for the quarter, a decrease of 30.7 percent compared to the prior year quarter. The decrease in revenues was primarily the result of a decrease in Elixir Individual Part D Insurance membership due to a change in the Company’s pricing structure and loss of commercial clients, partially offset by increased utilization and higher drugs costs.

Pharmacy Services Segment Adjusted EBITDA was $21.7 million, or 1.8 percent of revenues, for the first quarter compared to last year’s first quarter Adjusted EBITDA of $26.4 million, or 1.5 percent of revenues. The decrease in Adjusted EBITDA resulted from the lower membership as mentioned above and an increase in the medical loss ratio at Elixir Insurance, partially offset by improved procurement economics and reductions in SG&A expense.

Outlook for Fiscal 2024

The following fiscal 2024 outlook is forward-looking information, reflecting the Company’s expectations as of June 29, 2023, and subject to a range of assumptions and uncertainties described below and in documents that the Company files or furnishes with the Securities and Exchange Commission (the “SEC”).

Based on recent business trends, the Company is reducing total company Adjusted EBITDA guidance by $10 million to be between $330 million and $360 million. Pharmacy Services Segment Adjusted EBITDA expectations are being lowered by $10 million to be between $90 million and $100 million due to higher drug costs and a higher medical loss ratio at Elixir Insurance. Retail Pharmacy Segment Adjusted EBITDA remains unchanged and is expected to be between $240 million and $260 million, which is a result of tougher front-end sales trends balanced with cost savings.

Total revenues are expected to be between $22.6 billion and $23.0 billion in fiscal 2024. Retail Pharmacy Segment revenue is expected to be between $18.0 billion and $18.3 billion, and Pharmacy Services Segment revenue is expected to be between $4.6 billion and $4.7 billion, net of any intercompany revenues to the Retail Pharmacy Segment.

Net loss is expected to be between approximately $650 million and $680 million.

Adjusted net loss per share is expected to be between $4.29 and $4.78.

Capital expenditures are now expected to be approximately $175 million, with a focus on investments in technology, prescription file purchases and distribution center automation.

Conference Call Broadcast

Rite Aid will hold an analyst call at 8:30 a.m. Eastern Time today with remarks by Rite Aid's management team.

The call will be broadcast via the Internet at https://investors.riteaid.com. The telephone replay will be available beginning at 12:00 p.m. Eastern Time on June 29, 2023, and ending at 11:59 p.m. Eastern Time on July 29, 2023. To access the replay of the call, telephone (800) 770-2030 or (647) 362-9199 and enter the seven-digit reservation number 9029129. The webcast replay of the call will also be available at https://investors.riteaid.com starting at 12 p.m. Eastern Time today. The playback will be available until the Company’s next conference call.

About Rite Aid Corporation

Rite Aid Corporation is on the front lines of delivering healthcare services and retail products to Americans 365 days a year. Our pharmacists are uniquely positioned to engage with customers and improve their health outcomes. We provide an array of whole being health products and services for the entire family through over 2,200 retail pharmacy locations across 17 states. Through Elixir, we provide pharmacy benefits and services to millions of members nationwide. For more information, visit www.riteaid.com.

Cautionary Statement Regarding Forward-Looking Statements

Statements in this release that are not historical, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements regarding Rite Aid's outlook and guidance for fiscal 2024; Rite Aid’s plan to reduce SG&A expense and capital expenditure spend; the continued impact of the global coronavirus (COVID-19) pandemic on Rite Aid’s business; the continued impact of negative trends in Rite Aid’s front end sales and gross profit in the retail segment; and any assumptions underlying any of the foregoing. Words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "predict," "project," "should," and "will" and variations of such words and similar expressions are intended to identify such forward-looking statements.

These forward-looking statements are not guarantees of future performance and involve risks, assumptions and uncertainties, including, but not limited to: risks related to the prolonged impact of the COVID-19 global pandemic and the emerging new variants, including the government responses thereto; the impact of COVID-19 on our workforce, operations, stores, expenses, and supply chain, and the operations or behaviors of our customers, suppliers and business partners; our ability to successfully implement our turnaround program and other strategies; the impact of our high level of indebtedness, the ability to refinance such indebtedness on acceptable terms (including the impact of rising interest rates, market volatility, and continuing actions by the United States Federal Reserve) and our ability to satisfy our obligations and the other covenants contained in our debt agreements; outcome of pending or new litigation and government investigations, including, without limitation, those related to opioids, “usual and customary” pricing, government payer programs or other matters; our ability to monetize (and on reasonably available terms) the CMS receivable created in our Part D business; general competitive, economic, industry, market, political (including healthcare reform) and regulatory conditions (including changes to laws or regulations relating to labor or wages), including continued impacts of inflation or other pricing environment factors on our costs, liquidity and our ability to pass on price increases to our customers, including as a result of inflationary and deflationary pressures, a decline in consumer financial position, whether due to inflation or other factors, as well as other factors specific to the markets in which we operate; the impact of private and public third-party payers continued reduction in prescription drug reimbursements, new or disruptive business models or practices, and efforts to encourage mail order; our ability to manage expenses and our investments in working capital; our ability to achieve the benefits of our efforts to reduce the costs of our generic and other drugs; our ability to achieve cost savings and other benefits of our restructuring efforts within our anticipated timeframe, if at all; the outcome of our continuing efforts to monitor and comply with applicable laws, orders, regulations, policies and procedures; and our ability to partner and have relationships with health plans and health systems; and any requirement to incur additional impairment charges.

These and other risks, assumptions and uncertainties are more fully described in Item 1A (Risk Factors) of our most recent Annual Report on Form 10-K and in other documents that we file or furnish with the Securities and Exchange Commission

(the “SEC”), which you are encouraged to read. To the extent that COVID-19 adversely affects our business and financial results, it may also have the effect of heightening many of such risk factors.

Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to rely on these forward-looking statements, which speak only as of the date they are made.

The degree to which COVID-19 may adversely affect Rite Aid’s results and operations, including its ability to achieve its outlook for fiscal 2024 guidance, will depend on numerous evolving factors and future developments, which are highly uncertain. As a result, the impact on Rite Aid’s financial and operating results cannot be reasonably estimated with specificity at this time, but the impact could be material. Rite Aid expressly disclaims any current intention, and assumes no duty, to update publicly any forward-looking statement after the distribution of this release, whether as a result of new information, future events, changes in assumptions or otherwise.

All references to “Company” and “Rite Aid” as used throughout this release refer to Rite Aid Corporation and its affiliates.

Reconciliation of Non-GAAP Financial Measures

Rite Aid separately reports financial results on the basis of Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share, Adjusted EBITDA, Adjusted EBITDA Gross Profit and Adjusted EBITDA SG&A, which are non-GAAP financial measures. See the attached tables for a reconciliation of Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share and Adjusted EBITDA to net income (loss), and net income (loss) per diluted share, which are the most directly comparable GAAP financial measures. Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Diluted Share exclude amortization expense, merger and acquisition-related costs, non-recurring litigation and other contractual settlements, gains or losses on debt modifications and retirements, LIFO adjustments, goodwill and intangible asset impairment charges, restructuring-related costs, the gain or loss on Bartell acquisition, and the change in estimate related to manufacturer rebate receivables. Rite Aid believes Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Diluted Share serve as appropriate measures to be used in evaluating the performance of its business and help its investors better compare its operating performance over multiple periods.

Adjusted EBITDA is defined as net income (loss) excluding the impact of income taxes, interest expense, depreciation and amortization, LIFO adjustments, charges or credits for facility exit and impairment, goodwill and intangible asset impairment charges, inventory write-downs related to store closings, gains or losses on debt modifications and retirements, and other items (including stock-based compensation expense, merger and acquisition-related costs, non-recurring litigation and other contractual settlements, severance, restructuring-related costs, costs related to facility closures, gain or loss on sale of assets, the gain or loss on Bartell acquisition, and the change in estimate related to manufacturer rebate receivables). The add back of LIFO (credit) charge when calculating Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Diluted Share removes the entire impact of LIFO (credits) charges, and effectively reflects Rite Aid's results as if the company was on a FIFO inventory basis. Rite Aid believes Adjusted EBITDA serves as an appropriate measure in evaluating the performance of its business and helps its investors better compare its operating performance with its competitors.

Adjusted EBITDA Gross Profit includes LIFO adjustments, depreciation and amortization (COGS portion only) and other items. See the attached tables for a reconciliation of Adjusted EBITDA Gross Profit to Revenue, which is the most directly

comparable GAAP financial measure. Adjusted EBITDA SG&A excludes depreciation and amortization (SG&A portion only), stock-based compensation expense, merger and acquisition-related costs, non-recurring litigation and other contractual settlements, and other items. See the attached tables for a reconciliation of Adjusted EBITDA SG&A to Revenue, which is the most directly comparable GAAP financial measure. The Company believes Adjusted EBITDA Gross Profit and Adjusted EBITDA SG&A serve as appropriate measures in evaluating the performance of its business and helps its investors better compare its operating performance with its competitors.

The Company presents these non-GAAP financial measures in order to provide transparency to its investors because they are measures that management uses to assess both management performance and the financial performance of its operations and to allocate resources. In addition, management believes that these measures may assist investors with understanding and evaluating the Company’s initiatives to drive improved financial performance and enables investors to supplementally compare its operating performance with the operating performance of its competitors including with those of its competitors having different capital structures. While the Company has excluded certain of these items from historical non-GAAP financial measures, there is no guarantee that the items excluded from non-GAAP financial measures will not continue into future periods. For instance, the Company expects to continue to experience charges for facility exit and impairment charges and inventory write-downs related to store closures as the Company continues to complete a multi-year strategic initiative designed to improve overall performance. The Company also expects to continue to experience and report restructuring-related charges associated with continued execution of its strategic initiatives.

Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Diluted Share or other non-GAAP measures should not be considered in isolation from, and are not intended to represent an alternative measure of, operating results or of cash flows from operating activities, as determined in accordance with GAAP. The Company’s definition of these non-GAAP measures may not be comparable to similarly titled measurements reported by other companies, including companies in its industry.

 
RITE AID CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(unaudited)
 
 
 
June 3, 2023 March 4, 2023
ASSETS
Current assets:
Cash and cash equivalents

$

135,527

 

$

157,151

 

Accounts receivable, net

 

1,392,348

 

 

1,149,958

 

Inventories, net of LIFO reserve of $547,432 and $539,932

 

1,950,413

 

 

1,900,744

 

Prepaid expenses and other current assets

 

171,175

 

 

93,194

 

Total current assets

 

3,649,463

 

 

3,301,047

 

Property, plant and equipment, net

 

892,540

 

 

907,771

 

Operating lease right-of-use assets

 

2,457,110

 

 

2,497,206

 

Goodwill

 

356,436

 

 

507,936

 

Other intangibles, net

 

244,883

 

 

250,112

 

Deferred tax assets

 

12,368

 

 

12,368

 

Other assets

 

37,618

 

 

50,922

 

Total assets

$

7,650,418

 

$

7,527,362

 

 
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
Current maturities of long-term debt and lease financing obligations

$

6,060

 

$

6,332

 

Accounts payable

 

1,505,741

 

 

1,494,611

 

Accrued salaries, wages and other current liabilities

 

772,058

 

 

724,529

 

Current portion of operating lease liabilities

 

488,712

 

 

502,403

 

Total current liabilities

 

2,772,571

 

 

2,727,875

 

Long-term debt, less current maturities

 

3,327,970

 

 

2,925,258

 

Long-term operating lease liabilities

 

2,345,277

 

 

2,372,943

 

Lease financing obligations, less current maturities

 

12,151

 

 

12,580

 

Other noncurrent liabilities

 

139,897

 

 

130,482

 

Total liabilities

 

8,597,866

 

 

8,169,138

 

 
Commitments and contingencies

 

-

 

 

-

 

Stockholders' (deficit) equity:
Common stock

 

56,708

 

 

56,629

 

Additional paid-in capital

 

5,918,931

 

 

5,917,964

 

Accumulated deficit

 

(6,908,235

)

 

(6,601,517

)

Accumulated other comprehensive loss

 

(14,852

)

 

(14,852

)

Total stockholders' (deficit) equity

 

(947,448

)

 

(641,776

)

Total liabilities and stockholders' (deficit) equity

$

7,650,418

 

$

7,527,362

 

 
RITE AID CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
 
 
 
Thirteen weeks ended

June 3, 2023
Thirteen weeks ended

May 28, 2022
Revenues

$

5,653,162

 

$

6,014,583

 

Costs and expenses:
Cost of revenues

 

4,474,636

 

 

4,817,854

 

Selling, general and administrative expenses

 

1,255,223

 

 

1,217,929

 

Facility exit and impairment charges

 

20,001

 

 

66,571

 

Goodwill and intangible asset impairment charges

 

151,500

 

 

-

 

Interest expense

 

65,220

 

 

48,119

 

Gain on sale of assets, net

 

(8,193

)

 

(29,196

)

 

 

5,958,387

 

 

6,121,277

 

 
Loss before income taxes

 

(305,225

)

 

(106,694

)

Income tax expense

 

1,493

 

 

3,497

 

Net loss

$

(306,718

)

$

(110,191

)

 
 
 
Basic and diluted loss per share:
 
Numerator for loss per share:
Net loss attributable to common stockholders - basic and diluted

$

(306,718

)

$

(110,191

)

 
 
 
Denominator:
Basic and diluted weighted average shares

 

55,179

 

 

54,348

 

 
 
Basic and diluted loss per share

$

(5.56

)

$

(2.03

)

 
RITE AID CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
 
 
 
Thirteen weeks ended

June 3, 2023
Thirteen weeks ended

May 28, 2022
 
 
OPERATING ACTIVITIES:
Net loss

$

(306,718

)

$

(110,191

)

Adjustments to reconcile to net cash used in operating activities:
Depreciation and amortization

 

65,895

 

 

70,073

 

Facility exit and impairment charges

 

20,001

 

 

66,571

 

Goodwill and intangible asset impairment charges

 

151,500

 

 

-

 

LIFO charge

 

7,500

 

 

-

 

Change in allowances for uncollectible accounts receivable

 

4,004

 

 

3,763

 

Gain on sale of assets, net

 

(8,193

)

 

(29,196

)

Stock-based compensation expense

 

1,081

 

 

3,334

 

Changes in operating assets and liabilities:
Accounts receivable

 

(246,838

)

 

(104,458

)

Inventories

 

(57,169

)

 

(15,827

)

Accounts payable

 

20,558

 

 

(137,572

)

Operating lease right-of-use assets and operating lease liabilities

 

(10,857

)

 

(14,812

)

Other assets

 

(64,687

)

 

751

 

Other liabilities

 

51,385

 

 

15,327

 

Net cash used in operating activities

 

(372,538

)

 

(252,237

)

INVESTING ACTIVITIES:
Payments for property, plant and equipment

 

(35,891

)

 

(73,176

)

Intangible assets acquired

 

(11,612

)

 

(12,248

)

Proceeds from dispositions of assets and investments

 

8,157

 

 

30,839

 

Net cash used in investing activities

 

(39,346

)

 

(54,585

)

FINANCING ACTIVITIES:
Net proceeds from revolver

 

400,000

 

 

291,000

 

Principal payments on long-term debt

 

(1,009

)

 

(977

)

Change in zero balance cash accounts

 

(8,272

)

 

33,691

 

Financing fees paid for early debt redemption

 

(51

)

 

-

 

Payments for taxes related to net share settlement of equity awards

 

(46

)

 

(553

)

Deferred financing costs paid

 

(362

)

 

-

 

Net cash provided by financing activities

 

390,260

 

 

323,161

 

(Decrease) increase in cash and cash equivalents

 

(21,624

)

 

16,339

 

Cash and cash equivalents, beginning of period

 

157,151

 

 

39,721

 

Cash and cash equivalents, end of period

$

135,527

 

$

56,060

 

 
RITE AID CORPORATION AND SUBSIDIARIES
 
SUPPLEMENTAL SEGMENT OPERATING INFORMATION
(Dollars in thousands)
(unaudited)
 
 
Thirteen weeks ended

June 3, 2023
Thirteen weeks ended

May 28, 2022
 
Retail Pharmacy Segment
Revenues (a)

$

4,492,329

 

$

4,345,356

 

Cost of revenues (a)

 

3,405,466

 

 

3,247,999

 

Gross profit

 

1,086,863

 

 

1,097,357

 

LIFO charge

 

7,500

 

 

-

 

FIFO gross profit

 

1,094,363

 

 

1,097,357

 

Adjusted EBITDA gross profit

 

1,098,268

 

 

1,106,652

 

 
Gross profit as a percentage of revenues

 

24.19

%

 

25.25

%

LIFO charge as a percentage of revenues

 

0.17

%

 

0.00

%

FIFO gross profit as a percentage of revenues

 

24.36

%

 

25.25

%

Adjusted EBITDA gross profit as a percentage of revenues

 

24.45

%

 

25.47

%

 
Selling, general and administrative expenses

 

1,172,573

 

 

1,117,214

 

Adjusted EBITDA selling, general and administrative expenses

 

1,028,219

 

 

1,032,970

 

Selling, general and administrative expenses as a percentage of revenues

 

26.10

%

 

25.71

%

Adjusted EBITDA selling, general and administrative expenses as a percentage of revenues

 

22.89

%

 

23.77

%

 
Cash interest expense

 

61,767

 

 

45,244

 

Non-cash interest expense

 

3,453

 

 

2,875

 

Total interest expense

 

65,220

 

 

48,119

 

 
Adjusted EBITDA

 

70,049

 

 

73,682

 

Adjusted EBITDA as a percentage of revenues

 

1.56

%

 

1.70

%

 
 
Pharmacy Services Segment
Revenues (a)

$

1,196,154

 

$

1,725,857

 

Cost of revenues (a)

 

1,104,491

 

 

1,626,485

 

Gross profit

 

91,663

 

 

99,372

 

 
Gross profit as a percentage of revenues

 

7.66

%

 

5.76

%

 
Adjusted EBITDA

 

21,666

 

 

26,448

 

Adjusted EBITDA as a percentage of revenues

 

1.81

%

 

1.53

%

 
(a) - Revenues and cost of revenues include $35,321 and $56,630 of inter-segment activity for the thirteen weeks ended June 3, 2023 and May 28, 2022, respectively, that is eliminated in consolidation.
 
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA
(In thousands)
(unaudited)
 
 
 
Thirteen weeks ended

June 3, 2023
Thirteen weeks ended

May 28, 2022
 
 
Reconciliation of net loss to adjusted EBITDA:
Net loss

$

(306,718

)

$

(110,191

)

Adjustments:
Interest expense

 

65,220

 

 

48,119

 

Income tax expense

 

1,493

 

 

3,497

 

Depreciation and amortization

 

65,895

 

 

70,073

 

LIFO charge

 

7,500

 

 

-

 

Facility exit and impairment charges

 

20,001

 

 

66,571

 

Goodwill and intangible asset impairment charges

 

151,500

 

 

-

 

Stock-based compensation expense

 

1,081

 

 

3,334

 

Restructuring-related costs

 

78,130

 

 

22,646

 

Inventory write-downs related to store closings

 

2,057

 

 

7,955

 

Litigation and other contractual settlements

 

11,050

 

 

18,271

 

Gain on sale of assets, net

 

(8,193

)

 

(29,196

)

Other

 

2,699

 

 

(949

)

Adjusted EBITDA

$

91,715

 

$

100,130

 

Percent of revenues

 

1.62

%

 

1.66

%

 
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
ADJUSTED NET LOSS
(Dollars in thousands, except per share amounts)
(unaudited)
 
 
Thirteen weeks ended

June 3, 2023
Thirteen weeks ended

May 28, 2022
 
Net loss

$

(306,718

)

$

(110,191

)

Add back - Income tax expense

 

1,493

 

 

3,497

 

Loss before income taxes

 

(305,225

)

 

(106,694

)

 
Adjustments:
Amortization expense

 

17,133

 

 

20,626

 

LIFO charge

 

7,500

 

 

-

 

Goodwill and intangible asset impairment charges

 

151,500

 

 

-

 

Restructuring-related costs

 

78,130

 

 

22,646

 

Litigation and other contractual settlements

 

11,050

 

 

18,271

 

 
Adjusted loss before income taxes

 

(39,912

)

 

(45,151

)

 
Adjusted income tax expense (a)

 

195

 

 

1,490

 

Adjusted net loss

$

(40,107

)

$

(46,641

)

 
Adjusted net loss per diluted share:
 
Numerator for adjusted net loss per diluted share:
Adjusted net loss

$

(40,107

)

$

(46,641

)

 
 
 
Denominator:
Basic and diluted weighted average shares

 

55,179

 

 

54,348

 

 
Net loss per diluted share

$

(5.56

)

$

(2.03

)

 
Adjusted net loss per diluted share

$

(0.73

)

$

(0.86

)

 
 
 
(a) The fiscal year 2024 and 2023 adjustments to the income tax provision include adjustments to the GAAP basis tax provision commensurate
with non-GAAP adjustments and certain discrete tax items, when applicable, was used for the thirteen weeks ended June 3, 2023 and May 28, 2022.
 
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF ADJUSTED EBITDA GROSS PROFIT AND RECONCILIATION OF ADJUSTED EBITDA SELLING,
GENERAL AND ADMINISTRATIVE EXPENSES- RETAIL PHARMACY SEGMENT
(In thousands)
(unaudited)
 
 
 
Thirteen weeks ended

June 3, 2023
Thirteen weeks ended

May 28, 2022
 
 
Reconciliation of adjusted EBITDA gross profit:
Revenues

$

4,492,329

 

$

4,345,356

 

Gross Profit

 

1,086,863

 

 

1,097,357

 

Addback:
LIFO charge

 

7,500

 

 

-

 

Depreciation and amortization (cost of goods sold portion only)

 

2,642

 

 

2,893

 

Other

 

1,263

 

 

6,402

 

Adjusted EBITDA gross profit

$

1,098,268

 

$

1,106,652

 

Percent of revenues

 

24.45

%

 

25.47

%

 
 
 
Reconciliation of adjusted EBITDA selling, general and administrative expenses:
Revenues

$

4,492,329

 

$

4,345,356

 

Selling, general and administrative expenses

 

1,172,573

 

 

1,117,214

 

Less:
Depreciation and amortization (SG&A portion only)

 

52,827

 

 

53,215

 

Stock-based compensation expense

 

723

 

 

3,102

 

Restructuring-related costs

 

76,469

 

 

17,371

 

Litigation and other contractual settlements

 

11,050

 

 

9,952

 

Other

 

3,285

 

 

604

 

Adjusted EBITDA selling, general and administrative
expenses

$

1,028,219

 

$

1,032,970

 

Percent of revenues

 

22.89

%

 

23.77

%

 
 
 
Adjusted EBITDA

$

70,049

 

$

73,682

 

 
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED EBITDA GUIDANCE
YEAR ENDING MARCH 2, 2024
(In thousands)
(unaudited)
 
 
Guidance Range
Low High
 
Total Revenues

$

22,600,000

 

$

23,000,000

 

 
Pharmacy Services Segment Revenues

$

4,550,000

 

$

4,650,000

 

 
Gross Capital Expenditures

$

175,000

 

$

175,000

 

 
 
Reconciliation of net loss to adjusted EBITDA:
Net loss

$

(678,500

)

$

(651,500

)

Adjustments:
Interest expense

 

273,000

 

 

273,000

 

Income tax expense

 

2,000

 

 

5,000

 

Depreciation and amortization

 

280,000

 

 

280,000

 

LIFO charge

 

30,000

 

 

30,000

 

Facility exit and impairment charges

 

100,000

 

 

100,000

 

Goodwill and intangible asset impairment charges

 

151,500

 

 

151,500

 

Restructuring-related costs

 

155,000

 

 

155,000

 

Litigation and other contractual settlements

 

11,000

 

 

11,000

 

Gain on sale of assets, net

 

(9,000

)

 

(9,000

)

Other

 

15,000

 

 

15,000

 

Adjusted EBITDA

$

330,000

 

$

360,000

 

 
RITE AID CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET LOSS GUIDANCE TO ADJUSTED NET LOSS GUIDANCE
YEAR ENDING MARCH 2, 2024
(In thousands)
(unaudited)
 
 
 
Guidance Range
Low High
 
Net loss

$

(678,500

)

$

(651,500

)

Add back - income tax expense

 

2,000

 

 

5,000

 

Loss before income taxes

 

(676,500

)

 

(646,500

)

 
Adjustments:
Amortization expense

 

68,000

 

 

68,000

 

LIFO charge

 

30,000

 

 

30,000

 

Goodwill and intangible asset impairment charges

 

151,500

 

 

151,500

 

Restructuring-related costs

 

155,000

 

 

155,000

 

Litigation and other contractual settlements

 

11,000

 

 

11,000

 

 
Adjusted loss before adjusted income taxes

 

(261,000

)

 

(231,000

)

 
Adjusted income tax expense

 

2,000

 

 

5,000

 

Adjusted net loss

$

(263,000

)

$

(236,000

)

 
 
Diluted adjusted net loss per share

$

(4.78

)

$

(4.29

)

 

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